Remuneration System for Executive Officers
Basic Policy for the Remuneration of Executive Officers
The Nomination and Remuneration Advisory Committee will discuss the remuneration of Directors and Executive Officers, and report to the Board based on the following policy. The Committee will consider levels of the remuneration and linkage with performance by comparing them objectively with officers’ remuneration survey data of an external research body, and incorporate findings in its report to the Board of Directors.
- The Company shall establish a remuneration structure that emphasizes the linkage of remuneration with business performance and medium- to long-term corporate value and share value with the shareholders.
- Remuneration levels shall be appropriate for the roles and responsibilities of the Kirin Group’s officers.
- Remuneration shall be deliberated by the Nomination and Remuneration Advisory Committee, in which Non-Executive Directors constitute a majority, in order to ensure objectivity and transparency.
Composition of the Remuneration
- In order to encourage awareness of achieving short-term performance targets and enhancing medium to long term corporate value, remuneration for Directors of the Board is composed of three parts: basic remuneration (fixed remuneration), bonus (short-term incentive remuneration), and Stock Compensation (medium- to long-term incentive remuneration). The specific composition of remuneration is as follows according to the classification of officers eligible for the payment.
|Classification of Officers||Basic Remuneration||Yearly Bonus||Stock compensation||Purpose|
(excluding non-executive directors)
|○||○||○||Because they are responsible for the execution of business, Kirin Holdings have established remuneration structure that takes into account the achievement of short-term consolidated performance targets and the improvement of corporate value over the medium to long term.|
|Non-executive directors||○||---||---||Because they are responsible for supervising and advising Company and Group management from an objective position, only basic remuneration (fixed remuneration) is provided.|
|Audit & Supervisory Board Members||○||---||---||Because of their role of auditing the performance of directors’ execution of their business from an objective position, only basic remuneration (fixed remuneration) is provided.|
- The ratio of fixed remuneration and performance-linked remuneration are basically designed to be approximately 50% each when performance targets are reached.
Structure of performance-linked remuneration
1. Yearly Bonus
- The performance indicators are our consolidated performance indicators (consolidated normalized operating profit) and individual performance evaluation indicators. The bonus payment amounts for executive officers other than the president & CEO were corporate performance assessment indicators and individual performance evaluations, while the bonus payment amount for the president & CEO was based solely on corporate performance assessment indicators.However, beginning in fiscal 2021, the bonus payment amount for the president & CEO will also include an individual performance evaluation. This revision was made so the bonus payment to the president & CEO will reflect the chief executive officer’s responsibility for deciding the strategies and initiatives executed to achieve corporate performance targets.
- Weighting for responsibility for achieving corporate performance targets will also be applied to directors and executive officers other than the president.
- The amount of paid ranges from 0% to 200% where 100% indicates the achievements of targets.
Calculation Formula of individual remuneration
- A standard bonus is set for each officer based on internal regulations.
- “A” is the ratio of the part that is linked to company performance, and “B” is the ratio of the part that is linked to individual performance. Each ratio is set for each position based on internal regulations.
Targets and Evaluation Weighting (Fiscal 2021)
President & CEO
Representative Director of the Board, Senior Executive Vice President*
Other directors and executive officers
Company performance evaluation (consolidated normalized operating profit)
Individual performance evaluation
The Nomination and Remuneration Advisory Committee sets specific evaluation indicators and targets following interviews at the start of the fiscal year with the president & CEO and the chairman and outside directors of the Nomination and Remuneration Advisory Committee.
The Nomination and Remuneration Advisory Committee sets specific evaluation indicators and targets for individual priority areas and department performance based on a draft proposal prepared by the president & CEO following interviews at the start of the fiscal year with the directors and executive officers.
- Note：The procedures are the same for senior executive vice president not concurrently holding positions as directors.
2. Stock-based remuneration
- Stock-based remuneration is a Trust-type stock compensation (performance based).
- Points are provided in the year following the performance evaluation period, where such points are ranged from 50 to 150% in accordance with the degree of progress toward the performance targets during the performance evaluation period.
- In principal, the number of shares corresponding to the number of points will be awarded at a certain time after the lapse of three (3) years from the start of the performance evaluation period, (provided, however, that for the Company’s shares realizable under the Share Delivery Rules of the Company, an amount equivalent to the proceeds from the realization shall be paid in cash).
- Performance-linked factors constitute from ROIC, normalized EPS and non-financial evaluation pay rates and until 2020, ROIC and normalized EPS pay rates were 45% and non-financial evaluation pay rates were 10%. However, from 2021, the pay rates for ROIC and normalized EPS will be 40%, and non-financial evaluation pay rates will be 20%.
Mechanism of the trust-type stock compensation (performance based)
Calculation Formula for the performance-linked factors
Calculation Formula for the performance-linked factors as of 2021
- Non-financial evaluation is a comprehensive assessment of the progress and achievement of CSV commitments and the employee engagement.
Procedures for determining the remunerations of executive officers
- In order to ensure fair and reasonable application of the process in line with the above-mentioned basic policy for executive remuneration, the executive remuneration shall be deliberated at the Nomination and Remuneration Advisory Committee of which the majority of the members are Non-Executive Directors and whose Chairperson is also an Non-Executive Director, and the result is reported to the Board of Directors.
- As for determining the specific amount of remuneration, remuneration for Directors shall be decided at the Board and that for Audit & Supervisory Board members upon consultation with Audit & Supervisory Board based on the report from the Nomination and Remuneration Advisory Committee and within the limits of the remuneration amount determined in advance at the general meeting of shareholders.
- Nomination and Remuneration Advisory Committee regularly deliberates on the setting of remuneration levels, the ratio of performance-linked remuneration and its mechanisms, and meets in response to changes in the the environment of laws and regulations related to executive remuneration, and submits a report to the the Board.
Record of Remuneration (Fiscal Year 2020)
|Officer classification||Total remuneration|
|Total remuneration by type (million yen) and receiving officers (in numbers)|
|Fixed Remuneration||Performance-based Remuneration|
|Basic Remuneration||Bonus||Stock Compensation|
|Total||# of officers||Total||# of officers||Total||# of officers|
|Directors of the Board
(excluding Non-Executive Directors)
|Audit & Supervisory Board Members
(Excluding Audit & Supervisory Board Members)
|Non-Executive Officers||Non-Executive Directors||110||110||8||―||―||―||―|
|Audit & Supervisory Board Members||51||51||4||―||―||―||―|
- The number of board members as of the end of the current fiscal year is 12 Directors and 5 Audit & Supervisory Board Members, but the above remuneration includes remuneration for one Director and one Audit & Supervisory Board Member who retired as of March 27, 2020.
- As Director Chieko Matsuda assumed the position of Director after resigning from the position of Audit & Supervisory Board Member as of March 27, 2020, the number and total amount of eligible directors are included in the Audit & Supervisory Board Member category for the period of service as an Audit & Supervisory Board Member and in the Director category for the period of service as Director, respectively.
- The remuneration limit for Directors of the Board (Basic Remuneration plus Bonus) is 950 million yen per year (resolved at the 178th Ordinary General Meeting of Shareholders on March 30, 2017). In addition to this, the remuneration limit under the Restricted Stock Compensation System for Directors of the Board excluding Non-executive Directors is 250 million yen per year (resolved at the 178th Ordinary General Meeting of Shareholders on March 30, 2017).
- The remuneration limit for Audit & Supervisory Board Members is 130 million yen per year (resolved at the 178th Ordinary General Meeting of Shareholders on March 30, 2017).
- The total amount of trust-type stock-based remuneration, which is the non-monetary remuneration mentioned above, is not fixed at this time, so the amount of the provision recorded for the current fiscal year is shown.
Remuneration totals by officer (Fiscal Year 2020)
|Name||Officer classification||Total remuneration|
|Remuneration type (million yen)|
|Fixed Remuneration||Performance-based Remuneration|
|Basic Remuneration||Yearly Bonus||Stock Compensation|
|Yoshinori Isozaki||President & CEO||154||96||50||7|
- Only those persons whose total amount of remuneration exceeds 100 million yen are disclosed.